Crypto.com launches fully funded OTC options for institutional clients

Crypto.com has expanded its institutional product suite with the launch of Fully Funded OTC Options, a new over-the-counter derivatives offering designed for foundations and VIP clients on the Crypto.com Exchange.

The company said the product will allow eligible institutional participants to trade vanilla European options directly through its professional sales traders in a private, off-orderbook environment.

According to the announcement, the new service is aimed at addressing some of the challenges associated with executing large options transactions on public markets.

Private execution for large option trades

Crypto.com said institutional investors have historically faced difficulties when trading large option blocks on-chain or through public order books, where transactions can be affected by slippage and information leakage.

The company stated: "For the first time, foundations and VIP clients can trade vanilla European options directly through our professional sales traders in a secure, off-orderbook environment."

By offering a private venue for execution, the exchange said users will be able to structure bespoke contracts that align with their portfolio requirements and investment horizons.

The OTC product is designed to facilitate customized transactions while reducing the market impact that can accompany large public trades.

European-style contracts with full collateralization

The new offering consists of European-style vanilla options that are physically settled upon expiry.

Crypto.com said clients will be able to customize contract expiry dates for up to three months, allowing investors to tailor positions to specific trading strategies.

The contracts are also fully collateralized, with sellers required to reserve either the underlying asset or the strike currency at the outset of the transaction. According to the company, this structure eliminates liquidation risk.

At expiration, in-the-money positions will be settled through the physical transfer of assets between participating accounts.

The exchange also highlighted the availability of USD-denominated options, which it said could be used by foundations seeking to generate yield on spot holdings by selling covered calls.

Manual booking and direct quote requests

Under the new service, institutional clients can request quotes through dedicated Telegram and Slack trading channels.

The company said its sales team will handle the manual booking and confirmation process through a secure Sales Portal.

Settlement will be based on automated in-the-money and out-of-the-money determinations using exchange index prices.

"We are excited to introduce Fully Funded OTC Options, a sophisticated addition to our institutional offerings on the Crypto.com Exchange.", the company said.

The introduction of Fully Funded OTC Options expands the range of products available to the exchange's institutional client base, adding a customized derivatives solution alongside its existing trading services.